Trent Reznor Backs Chris Anderson’s Theory of ‘Free’

Malcolm Gladwell may have taken issue with Wired magazine editor-in-chief Chris Anderson’s assertion that the price of digital goods naturally drops to zero, but Trent Reznor — who has successfully practiced the theory for years — couldn’t agree more.

Some fans objected to Reznor’s claim that Topspin Media (video interview) “got it right” with its re-release of the Beastie Boys album Ill Communication, which offers a wide array of merchandise in just about every conceivable format at a wide variety of prices. It’s become a well-worn criticism of the independent distribution model — that fledgling bands need a helping hand in order to make it in the music business.

Not so, says Reznor. According to him, giving away digital music while charging for scarce, premium edition is the best way forward for artists of all stripes — not just Radiohead and his own band, Nine Inch Nails.

“Forget thinking you are going to make any real money from record sales,” wrote Reznor on his message board. “Make your record cheaply (but great) and GIVE IT AWAY [as DRM-free MP3s] … Collect people’s e-mail info in exchange (which means having the infrastructure to do so) and start building your database of potential customers. Then, offer a variety of premium packages for sale and make them limited editions / scarce goods.”

It’s a play straight out of Anderson’s playbook (and, in fact, Anderson cites Nine Inch Nails as an example of a business that understands “Free”).

To put it into practice, Reznor advises that bands distribute through Amazon, TopSpin or Tunecore; set up a simple, Flash-free site outside of MySpace (which he says is “dying and reads as cheap / generic”); never abuse their mailing list; use free tools from Twitter, Flickr, Vimeo, YouTube and SoundCloud; and give people a reason to keep coming back to their site (Reznor’s own forums are an example of this strategy).

However, Reznor says the strategy of giving away music in return for e-mail addresses, then marketing pricey box sets and other premium goods to those e-mail addresses only makes sense if a band wants to keep all its money and stay in control of its image.

“If you are looking for mainstream super-success (think Lady GaGa, Coldplay, U2, Justin Timberlake), your best bet in my opinion is to look at major labels and prepare to share all revenue streams / creative control / music ownership.

To reach that kind of critical mass these days, you’ll need old-school marketing muscle, and that only comes from major labels.

“Good luck with that one.”